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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Aging Method Bad Debt Expense

Carol Simon, the manager of Handy Plumbing has provided the following aging schedule for Handy’s accounts receivable:

Chapter 5, Problem 84BPSB, Aging Method Bad Debt Expense Carol Simon, the manager of Handy Plumbing has provided the following

Carol indicates that the $125,200 of accounts receivable identified in the table does not include $9,400 of receivables that should be written off.

Required:

1. Journalize the $9,400 write-off.

2. Determine the desired post adjustment balance in allowance for doubtful accounts.

3. If the balance in allowance for doubtful accounts before the $9,400 write-off was a debit of $550, compute bad debt expense. Prepare the adjusting entry to record bad debt expense.

To determine

(a)

Aging method:

This is a method in which the receivables are sorted according to their collectable estimation. This is done on the basis of their outstanding invoices period. Basically, aging means to check the how old an outstanding balance of receivable is present in the books.

To calculate:

The journal entry for the write-off of payment.

Explanation

The Handy Plumbing accounts receivables indicate a total of $1,25,200 in which a sum of $9,400 is not included which is for the purpose of write-off. This is given in the question

To determine

(b)

Aging method:

This is a method in which the receivables are sorted according to their collectable estimation. This is done on the basis of their outstanding invoices period. Basically, aging means to check the how old an outstanding balance of receivable is present in the books.

To calculate:

The post adjustment balance in allowance for doubtful accounts.

To determine

(c)

Aging method:

This is a method in which the receivables are sorted according to their collectable estimation. This is done on the basis of their outstanding invoices period. Basically, aging means to check the how old an outstanding balance of receivable is present in the books.

The computation of bad debt and necessary adjusting journal entry for recording the bad debt.

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